Analysis of Intermediate Product Price and Social Welfare in the Vertical Merger of Enterprises

With the development of modern economy, the merger of enterprises is not only the important growth method of the enterprise, but also the strategic tool with which a nation may adjust the industrial structure and guarantee its social welfare. Used as a kind of enterprise’s market behavior, the enterprise merger plays a key role in extending the scale of enterprise, increasing the property effectively and improving the economic performance. The merger of enterprise is divided into horizontal m…

Analysis of Intermediate Product Price and Social Welfare in the Vertical Merger of Enterprises

According to the different products that two upper enterprises produce, this paper analyzes the transfer pricing of intermediate product and the effect of social welfare of vertical merger under imperfect competition market. The conclusions are: the transfer pricing of intermediate product is equal to marginal cost; the perfect outputs that upper enterprises sell to the market before and after the vertical merger of enterprises are the same; the product price in the integrated enterprises may be higher, lower or equal to the price in non-integrated enterprises.